Buffalo’s HarborCenter Did Not Need or Deserve Brownfield Tax Credits

* WNY Developers can be as Opportunistic & Undeserving as their NYC Counterparts *

Buffalonians deserve objectivity and accurate facts from the media, especially from their primary daily newspaper. The editorial board of the Buffalo News failed to meet this standard with its March 30, 2015 opinion on the state’s Brownfield Cleanup Program (BCP). [Also see the article in the April 2, 2015 edition of the Buffalo News under the headline, “Region dodges brownfield bullet – Restrictions apply only to New York City…”]

As lawyers for developers well know, a “brownfield” is a parcel of land that may be difficult to reuse or redevelop because of the presence or potential presence of contamination. As described by the State, the brownfields program provides tax credits to developers to encourage the voluntary cleanup of contaminated properties so that they can be reused and redeveloped, and to reduce development pressure on “greenfields”.

According to the recent Buffalo News editorial, “undeserving” and “opportunistic” downstate developers are scamming the program “to help fund projects in high-value areas … that would have been built without the tax credits.” In contrast – when viewed through the BN’s conveniently rose-colored glasses – “this region has used the program responsibly, helping pay for … SolarCity at RiverBend and downtown’s HarborCenter, and other worthy projects.”

Note: Despite prior remediation measures at the RiverBend site along the Buffalo River and Outer Harbor, an April 2, 2015 article in the Buffalo News, under the headline, “Radioactive material found at RiverBend, but work continues,” reports that the discovery of an iron ore kettle that set off radiation detection equipment when shipped to a landfill in Lewiston “has prompted a new wave of environmental testing at RiverBend.”

I am in no way excusing the manner in which brownfield-related tax credits have been used to subsidize New York City area projects. But, when evaluated by the criteria utilized by the Buffalo News when criticizing “opportunistic downstate developers,” HarborCenter, the development being built by Terry and Kim Pegula on the Inner Harbor’s “Webster Block,” certainly appears undeserving of special tax relief.

First and foremost, as heralded in Mayor Byron W. Brown’s April 2012 press releasesoliciting proposals for the “Webster Block,” the former parking lot located directly across from the First Niagara Center was “the most sought after parcel of land in the Buffalo-Niagara Region … considered a prized downtown parcel due to its location in Downtown Buffalo, its proximity to Buffalo’s waterfront, two major sports venues, and the Peace Bridge.” [Also see Mayor Brown’s 08/29/12 announcement selecting the HarborCenter proposal for the Webster Block site.] To suggest that the Pegulas needed the extra incentive of brownfield tax credits to proceed with their hockey-focused project – adjacent to the home of their Buffalo Sabres – is naïve, at best. Terry Pegula’s intention was to create a magnet for hockey lovers that would include the National Hockey League’s only three-rink complex by connecting the new facility with First Niagara Center. No other location would accomplish his goal, and existing green space in the Buffalo area was not threatened by the HarborCenter proposal..

Second, there is scarcely anything in the official records to suggest that protection of the public health and the environment mandated special treatment and cleanup of the “Webster Block” site, given the proposed plans to construct a 19-story mixed-use facility with a hotel, two NHL-sized hockey rinks, and other commercial uses. Although the former parking lot had been used for warehousing and manufacturing prior to 1980, it was not a “Superfund” site or widely known or thought to be highly contaminated. Contrary to the Buffalo News portrayal of a typical brownfield site, the HarborCenter parcel could not fairly be characterized as a heavily contaminated property where substantial cleanup and construction costs outweighed the future value of the project

As described in a February 2013 Buffalo News article, the Pegulas planned to spend $8.7 million to clean up the HarborCenter site, and anticipated receiving $20 million in state brownfield tax credits. That tidy profit is on top of the nearly $37 million incentive package the billionaire couple received from the Erie County Industrial Development Agency (ECIDA) in real property and sales tax relief.

One could easily conclude that WNY developers can be as opportunistic and undeserving as their downstate counterparts.

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